Labor Day: Why small business works for America

Labor Day is a holiday to honor hard working Americans, and small business owners are among the hardest workers around. They are often the first ones in and the last ones out. They toil and sweat beside their employees on the same job site, under the same tough conditions, behind the same counter or in the same office.

The National Federation of Independent Business represents more small businesses than any other organization. In fact, 60 percent of our 350,000 members employ between one and five workers. Few small business owners live in mansions or drive luxury automobiles. Most take home a modest income after paying their workers, expenses and taxes. They don’t see their workers as line items, they see them as critical team members working to build the business—family.

But when the government regulates businesses, hardworking small business owners are often an afterthought. Even agencies required by law to consider the effects of the regulation on small businesses, like the Environmental Protection Agency, often wave these requirements.

Seven years after the Great Recession, small business owners are still not confident in the economy. The NFIB Small Business Optimism Index remains well below the 40-year average. Owners simply don’t see an economic surge in the near future. Meanwhile, they rank government regulations and red tape as one of their top concerns. Those regulations are often aimed directly at making it more expensive or complex to hire workers. Below are three ways government is doing that right now.

Across the country, labor activists are engaged in a campaign to increase the minimum wage. Seattle, Los Angeles, New York and many small municipalities have put in place plans to increase wages to $15 an hour. There is already early evidence that the change is hurting jobs.

Seattle has seen a rash of restaurant closings. More than 1,000 food service jobs were lost in the month of May alone. That’s almost as many jobs as were lost during the worst month of the 2009 recession.

In the San Francisco Bay area, a small pizza chain told the Los Angeles Times that their sales had dropped by a quarter as they raised prices to pay higher salaries. They’ve instructed their customers to stop tipping, something that doesn’t sit well with some servers.

In some cases, once activists get their lobbied-for increase, labor unions then start asking for exemptions. This happened most recently in Los Angeles, where even liberal elected officials questioned how the union could call for increased wages for everyone but their own members.

State and local governments have been increasing labor costs through new mandatory leave requirements. Small business owners often go the extra mile to accommodate workers who are sick or need to care for a relative. But for a very small business, mandatory paid sick leave can be a huge burden.

For instance, a landscaping or automotive repair shop doesn’t get paid unless the work gets done. When a worker is out, the owner has to find a temporary replacement or do the work themselves. The added cost can be the difference between breaking even or losing money for the week.

Washington has also been working hard to find ways to discourage hiring. ObamaCare has increased the costs of hiring and insuring employees, even for businesses not subject to the coverage mandate.

Just recently the National Labor Relations Board upended decades of established rules governing joint employees. Now, many subcontractors and franchise businesses could have their workers considered joint employees of large corporations. Businesses built and maintained for decades by small owners could be lost overnight to a distant Washington ruling.

Hiring has been anemic since the recession and, according to our Small Business Optimism Index, job creation was flat in June and July. The labor force participation rate is at a 38-year low. It’s no wonder when government seems to be finding ways to make hiring more expensive and more complicated.

Small businesses account for half of private GDP, but they are often an afterthought on Labor Day.

Small business owners aren’t distant CEOs. They work closely with their employees to build something together. Government needs to give them the freedom to prosper, grow and create good jobs.

This would be something we can all celebrate.